Mutual funds allow investors to invest in a basket of two or more securities that are managed by the mutual fund manager. The securities in the mutual fund may be selected by the manager using the manger's skill, or may be selected using a fixed criteria, such as the conventional S&P 500 index. When a mutual fund is operating, its share price may fluctuate with the value of the securities in the fund.
Before a mutual fund begins operating, investors may be allowed to subscribe to the fund. To subscribe to the fund, an investor commits a certain amount of money to the fund or commits to buying a certain number of shares in the fund in advance of its operation. The period during which such commitments are allowed is known as the subscription period. When the fund begins operating at the end of the subscription period, the investor purchases shares of the fund at its opening price.
When a broker is used to subscribe to a mutual fund, the broker informs the fund manager, usually prior to the operation of the fund, how many investors have subscribed to the fund and how much money they have committed. If the opening share price is fixed in advance, the broker may inform the fund manager of the number of shares to which investors have subscribed in place of the amount of money committed.
Conventional brokers have salespeople who solicit such subscriptions to their investors, using conventional methods such as placing telephone calls or mailing direct mail materials. Investors subscribe over the telephone, or by using a reply card received with the direct mail materials or in person at the broker's office. However, the cost of such solicitations is relatively high because the response rate of such a solicitation is relatively low. The cost of a mailing may be less than the cost of a telephone solicitation, however because the potential investor must take the time and effort to respond, the response rate may be far lower than the response rate of a telephone solicitation, making both forms of solicitation prohibitively expensive. Such costs can drive up the costs of subscriptions, which can limit the availability of new funds.
Many investors use online brokerage services. An online brokerage service may allow an investor to subscribe to a mutual fund before its operation by filling in one or more online forms using a browser on a personal computer coupled to the Internet. The information is returned to the online brokerage using conventional CGI techniques. However, investors using online brokerage services may not have a relationship with a specific broker, and so a telephone call informing the investor of a new subscription to a mutual fund may not be welcome. Because many investors of an online brokerage service prefer little intrusion from the service, receiving mass mailings announcing subscription offerings may also be unwanted.
As a result, online brokerages may simply include the subscription with the other funds they sell. Because of the large number of funds that may be offered to investors using an online brokerage, a subscription offering may get lost among the dozens or even hundreds of funds the online brokerage offers to its customers. Identifying a subscription offering using an online brokerage can require the user to locate the subscription offering manually by sifting through a number of web pages describing mutual funds. To find a fund among such a wealth of information, the user has to go looking for the subscription, having heard about through another source such as an advertisement, or simply be lucky enough stumble upon information about the subscription, for example while browsing information about similar funds. Because of the time and effort and luck involved in locating subscription offerings using an online broker, subscription offerings using online brokers have had limited success.
What is needed is a method and apparatus that can inform an investor who uses an online brokerage of a subscription offering in a cost effective, minimally intrusive manner without requiring the investor to manually search for the subscription offering on the online brokerage's web site, and can allow the investor to subscribe to the mutual fund with a minimum of effort.